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LVS YOUTUBE

In preparation for the LVS Q2 earnings release on July 28th, we’ve put together the pertinent forward looking commentary from LVS’s Q1 earnings release/call and subsequent conferences.

POST EARNINGS CONFERENCE COMMENTARY

General Comments:

  • “Sheldon made a comment about a $3 billion target of EBITDA for next year. But if you’re looking at dividing those numbers, for all practical purposes, they divide about 1.3 billion for Macau, 1.25 billion for Singapore, and about 450 for Las Vegas and Bethlehem…. That 1.3 billion in Macau allows for a couple of months of opening of Phase 1 of 5 and 6 for Shangri-La and Sheraton, and we’ve had those conversations this morning and talked about those numbers. It’s a goal for us. It’s not a forecast. It’s not a guidance number.”
  • “If you look at 2006 when we opened the Sands Hotel in Macau, we had 45% of our EBITDA from the U.S., 55% in Asia, and now in 2009, you see 25/75 and the future of LVS, as we sit today, 17% in the U.S. and 83% in Asia, and if Singapore does what we expect it to do, it will probably be 15 and 85.”
  • “If we do anything in Japan or Vietnam or Korea or India, whatever the areas that have potential for integrated reserve, whether we do one or more, his expectation is that Sands China would be a joint venture partner in that. And we would use some of their cash in terms of that joint venture.”
  • “There is always a possibility of paying a dividend out of Macau if we want to pay a dividend. We’re 71% shareholder, which would benefit the other 29% shareholders as well. And there are some tax-efficient ways of doing that.”
  • “And if, eventually, which we think in ‘12, the malls might sell, then we’d have more cash. So, we could be debt-free there or pay down a lot of the debt – we’ve now got about 4.3 of debt. So, there’s plenty of debt that could be paid down in that environment.”

Las Vegas and PA:

  •  “In the MICE environment in Las Vegas, we’re moving forward; booking trends are healthy…. Pricing remains below historic levels on the group side, and pricing is recovering on the transient or weekend leisure side and we’ve experienced that in the last few months and continue to experience that as we book forward.”
  • “Our head count in Las Vegas in 2007 was 8,000 FTEs. We now operate today at about 6,500; it’s actually a little lower than that. So, the operating leverage for the future, and the operating leverage that we’re already seeing this year, compared to last or the year before, is pretty significant.”
  •  “Our running rate now is about $4 million a month of EBITDA.”

Macau:

  • [From shareholder meeting] “Sands China … could generate between $1.0 and $1.2 billion in adjusted EBITDA in the year ended December 31, 2010.”
  • “We also took a long time to open our 19 Paiza mansions, which are now open and doing well, and our EBITDA, which are very small numbers, obviously, compared to the rest of the facilities, went from$ 4 to $19 million—a pretty good size improvement in the first quarter. That improvement also continues as we speak in the second quarter of this year.”
  • [Four Seasons Apartments timing- comment made in June 2010] “We’ve cleared all the legal hurdles for that signature. And he’s [CEO] new; he’s 6 months in the job and probably making a decision, hopefully, sometime in the next 3 or 4 months. We’re all ready to sell those apartments, and you should know that whatever we get for those apartments, 75% of the dollars will pay down debt in the Macau facility.”
  • [Four Seasons Apartments] “And 50 out of the 60 wanted to buy at a rate of between 1700 to 1900 U.S. per square foot. I know that’s tough for a lot of people to believe, but that’s the way it is.”
  • [Sites 5 & 6] “We will open Phase I on or about the last, the third quarter of 2011, and we will open the rest of Phase I and Phase II by the end of the year 2011 or in January of 2012…. We’ve started construction. There’s been a lot in the papers about whether or not we’ll have enough labor, foreign labor. But since we’re not employing the laborers directly, except perhaps for the Macanese, the laborers are being brought in by the contractors and subcontractors. So they’re responsible for getting the labor. And based upon our  recent discussions within the last week, we think we’ll have enough labor to finish it.”
  • “Based upon our experience there, I see that the one thing that has affected the visitation, particularly at the high end, was the financial downfall in Shanghai. So as the Shanghai market takes another depressing-type fall, like we had from 2008 to 2009, or at the end of the six months straddling ‘08 and ‘09, then I think it’ll see some effect or some diminution. But it wasn’t a 50% diminution in profit. It was 8%, 10%, 12%. 17%, I think that was the highest number. It’s not as though everything is going to hell in a hand-basket. It’s just that it might have some effect. It will have some effect, the drop in the market, because a lot of people, no matter who they are, are betting on the market. And so the Asians got in the market, particularly the Chinese. But I don’t think, being there now for eight or nine years in that part of the world, the average gambler is affected by the macroeconomics of China.”

Singapore:

  • “Singapore in my opinion -- it’s only my opinion; I don’t have to file an 8-K. I think, based upon the earnings and the multiple that will get us there will be worth between 15 and $20 billion alone, maybe more.”
  • “On June 23, the SkyPark, we have a facility you see on top of the building, will open, and the observation deck will open. There’s also a restaurant and nightclub and a concierge lounge on that deck. They will not open until the fall. The museum and the theaters will open in the fall, and the rest of the shopping center, which has 40 stores opened out of 320 that are leased, the rest of those stores, 40 more, will open by June 23 and the rest will open through the remainder of the year. The Crystal Pavilion will be down in the front and if you’re looking at it right about in the center will be a Louis Vuitton store. It will open probably in next winter, February or March. I want to emphasize to all of you that every one of these areas that open is high-margin profitability for Marina Bay Sands.”
  • [Singapore] “We don’t really think there’s going to be a commission war there. We raised our commission levels. We’re still below the Genting level of commission… We don’t seem to have any indication that they’re going to go up from here at all.”
  • [VIP/Mass Mix] “But in terms of net bottom line, I’d say it looks like 65/35, 60/40, something like that.”
  • “We are at about 7,500 today. We’ll probably go to 8,400 as we open the rest of the resort, and there’ll be more that are not exactly on a payroll. There’ll be about 15,000 employees there with everything that’s going on, but only about 8,400 would be ours.” 
  • “The major expense structures of Singapore are the transportation costs, logistic costs and security costs. Those costs are going to be what we’re running today—we don’t expect to go up. So, when you eventually see the first quarter on a monthly basis, you’ll see a pretty solid running rate. I don’t expect much reduction from that; you’ll be able to see the running rate. In spite of that in the first month of operation, we had a pretty decent EBITDA margin, based on everything together. On our expectations for EBITDA margins in Singapore on maturity, we’d be disappointed if we’re not over 40%.”
  • “I would suspect that during the ramp-up period, we will have probably 70 to 80% of the income in the casino and the rest in non-gaming activities”
  • “I will tell you that my original estimates of the gross profit margin from the casino, departmental margin are accurate and that we can make 58, 60% gross profit margin after taxes, after all the departmental expenses, contribution to EBITDA—before the unattributed expenses like building operations and things like that. The EBITDA number percentage will be the highest percentage that any casino has ever experienced, at least in our universe.”
  • [Sheldon on commissions] “So they’re afraid that I’ll leapfrog over them, which I will. So if they don’t want to come – I told one of the representatives, I said, if you raise your price, I’ll raise you. If you raise me again, I’ll leap over you. If you raise me again, I’ll go further over you. We’re heading for mutually assured destruction unless we agree upon a rate that the government will embed in the law. Neither you nor I can break that. And they just don’t want to do it. Now that they’ve gotten a couple of months under their belt, I think they’ve already waved the white flag and they’re ready to sit down with us because, as I’ve said, I’m not very aggressive—I just get it from my kid. But I will – you know I hate losing more than I love winning. So I will get – I mean I’ll just go right to the top. I’ll just give away the whole 2.85 until we win over all the business and then we’ll back it off if we have to.”
  • [Commissions] Q: “Is it fair to say that Singapore market level right now is higher than Macau?”
    • A: “Yeah.”

 

Q1 CONFERENCE CALL

Las Vegas:

  • “Looking forward, we expect to realize more group rooms in 2010 than we realized in 2009. If the pace of group business bookings continues to improve, 2011 should be stronger than ‘10.”
  • [On rates] “I think we’ve been averaging on weekends between $240 and $260….For 2011 group rates, we’re trying to stay above 200 bucks. In some groups, we are getting higher than that. I can’t tell you that we are there yet. We have some business with lag that goes back six to eight months.”

Macau:

  • “Our expectation and our lenders know that we will open with enough tables in five and six to justify the numbers that we projected in the loan documents (400 tables and 2200 slots). That will involve moving some tables from some of our facilities, as well as the additions of some electronic games…. I believe the number is approximately 170 tables that we’re going to move that either are not being used right now or that are  the marginal games that are being used at lower rates. We’re adding 100 electronic table games, which offer some very good potential. We’re going to try different electronic table games. We’re also assured by the government that we will have the 270 extra games that we originally put in our plans in 2013.”

Singapore:

  •  “We do give away from 0.75% to 1.0% to the players direct, so far at the high end.”
  • [On slot win per slot per day] “I’ll give you a range, from $400 to $900 per unit per day. I think we’ll have a somewhat higher average when we bring in those electronic table roulette games.”
  • [On customer mix] “33% to 40%, maybe at the most, are Singaporeans.”
  •  “We are at 70 out of 139 VIP tables, 442 out of 559 mass tables, and 1450 out of 1,642 slots.”